Accountants's bill for Carillion liquidation tops £20 million so far
The accountants handling the break-up of collapsed infrastructure Carillion have already racked up a bill of more than £20 million, MPs were told today,
But it was not possible to give an estimate of how much the final bill will be, or how much will be raised for creditors of the failed Wolverhampton-based construction and services giant.
Three senior executives from PwC, the firm brought in by the Official Receiver as special managers to handle the liquidation, were being quizzed by the Business and Pensions Committees this morning over the collapse of Carillion.
The firm's demise left a £900 million debt pile, a £590 million pension deficit and hundreds of millions of pounds in unfinished public contracts.
PwC's David Kelly said 1,600 jobs had been lost so far, but 9,500 workers had moved with contracts to new operators. Around 7,100 remain working on around 70 private and public contracts while PwC tries to find new companies to take the work on.
Mr Kelly said PwC was given the job of handling the liquidation on 12 hours notice in January. In the first two weeks it had 257 people working across Carillion, but this has now reduced to 112.
The accountancy is currently owed £20.4 million for the work it has carried out in the first eight weeks, but Mr Kelly said it would not be possible to put a figure on a possible final cost until June because of the 'complexity' of the work. Although PwC will be at the top of the list of companies to be paid through the Official Receiver, he said it had not received any money so far.
But he confirmed that it was currently costing on average £12,500 per week for each PwC staff member working on Carillion, charged at around £360 per hour each.
Business Secretary Greg Clark and Work and Pensions Secretary Esther McVey also faced questions from MPs.
Mr Clark told MPs the Government had successfully managed the impact Carillion's failure had on public services.
"Clearly when you had a company that went into insolvency you should learn the lessons from it," he said.
"From the outset there was a big concern to ensure the continuity from the procurement point of view of Government services, and I think that was broadly achieved."
Carillion had around 450 contracts with the Government, which represented around 38% of the company's revenues in 2016
"A lot of focus was made by my colleagues in minimising the consequences for the public on that and I think that's had some success," Mr Clark added.
On late payments to small suppliers by Government contractors, Mr Clark said: "The practice has not been good enough.
"Where Government has influence it should use it for good. This is a moment when we need to strengthen that. It's fundamental to the economy."
Smaller firms being passed over for payment are right to feel "anger" over late payments, Mr Clark added.
Asked whether the environment for outsourcing firms like Carillion - which are taking on high risk worth with low margins - was piling too much pressure on those businesses, Mr Clark said it was a "perfectly legitimate question" which required "careful reflection".
"I've seen a view expressed that, for example, looking at the size of the balance sheet of a company might be something that is given greater prominence in procurement decisions.
"Now there's an obvious argument for that - the more robust the balance sheet, the more resilient it might be."
On the accountancy regulator, the Financial Reporting Council, Mr Clark said it should be reviewed independently.
"If you look back at the timeliness and record of some of the FRC's investigations, I know that these two committees have been questioning whether it could have been more prompt and more rigorous.
"There is a strong case for reviewing the operation of the FRC and that is something that I intend to require.
"We should look at the operations of the FRC to see whether there are changes that are required - this should be done independently."
The FRC announced an investigation earlier this year into how accountancy giant KPMG audited the accounts of Carillion.
Answering questions over whether the Big Four accountancy firms - KPMG, Deloitte, PwC and EY - should be broken up after the Carillion debacle, Mr Clark said: "I don't want to answer that without considering advice on the consequences.
"In general I agree... that more competition tends to act in the interests of consumers and innovation.
"When you have a concentrated market, that is not a good state of affairs.
"I will take an interest in whether further reforms are needed, including the suggestion you made (about a break-up)."
Figures show the four groups collectively pocketed more than £70 million in the decade running up to Carillion's collapse.